10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-54137

OXYSURE SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware	71-0960725
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

10880 John W. Elliott Drive, Suite 600, Frisco, TX 75033

(Address of principal executive offices)

(972) 294-6450

(Registrant’s telephone number)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ     No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ     No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	þ
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No þ

Our common stock is traded in the over-the-counter market and quoted on the OTCQB under the symbol “OXYS.”

The number of shares outstanding of the registrant’s class of $0.0004 par value common stock as of May 14, 2015 was 29,843,951.

INDEX

		Page
		Number
PART I - FINANCIAL INFORMATION
Item 1.	Condensed Financial Statements	F-1
	Condensed Balance Sheets – March 31, 2015 unaudited and December 31, 2014	F-1
	Condensed Statements of Operations – For the three months ended March 31, 2015 and 2014 (unaudited)	F-2
	Condensed Statements of Cash Flows – For the three months ended March 31, 2015 and 2014 (unaudited)	F-3
	Condensed Notes to Financial Statements	F-4 – F-14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	7
Item 4.	Controls and Procedures	7
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	8
Item 1A.	Risk Factors	8
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8
Item 3.	Defaults upon Senior Securities	8
Item 4.	Mine Safety Disclosures	8
Item 5.	Other Information	8
Item 6.	Exhibits	8
SIGNATURES		9

PART I - FINANCIAL INFORMATION

ITEM 1.   CONDENSED FINANCIAL STATEMENTS

OXYSURE SYSTEMS INC.

BALANCE SHEETS

	March 31,			December 31,
	2015			2014
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	98,351		$	647,093
Accounts receivable, net		429,610			369,575
Inventories		372,121			277,346
License fee receivable		448,308			463,308
Prepaid expenses and other current assets		86,747			53,588
Total current assets		1,435,137			1,810,910
Property and equipment, net		92,095			91,537
Intangible assets, net		355,207			362,764
Other assets		306,893			246,237
TOTAL ASSETS	$	2,189,332		$	2,511,448
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	557,942		$	558,338
Related party payable		255,000			154,850
Capital leases - current		-			149
Notes payable - current, net of discount		88,484			40,897
Convertible notes payable, net of discount		702,505			606,932
Derivative liability		28,359			31,010
Total current liabilities		1,632,290			1,392,176
Long-term liabilities
Notes payable, net of discount		-			44,484
Total long-term liabilities		-			44,484
TOTAL LIABILITIES		1,632,290			1,436,661
COMMITMENTS AND CONTINGENCY (NOTE 9)
STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.0005 per share; 25,000,000 shares authorized;
518,750 Series A convertible preferred shares issued and outstanding as of March 31, 2015 and 593,750 shares issued and outstanding as of December 31, 2014.		258			296
975 Series B convertible preferred shares issued and outstanding as of March 31, 2015 and 1,145 shares issued and outstanding as of December 31, 2014.		-			-
Common stock, par value $0.0004 per share; 100,000,000 shares authorized;
29,630,026 shares of voting common stock issued and outstanding as of March 31, 2015 and 28,438,631 shares issued and outstanding as of December 31, 2014		11,855			11,377
Additional Paid-in Capital		19,926,240			19,104,322
Accumulated deficit		(19,381,311	)		(18,041,208	)
TOTAL STOCKHOLDERS’ EQUITY		557,042			1,074,787
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,189,332		$	2,511,448

See accompanying notes to financial statements

F-1

OXYSURE SYSTEMS INC.

STATEMENTS OF OPERATIONS

(Unaudited)

	For the three months ended March 31,
	2015			2014
Revenues, net	$	624,514		$	356,229
Cost of goods sold		335,856			205,590
Gross profit		288,658			150,639
Operating expenses
Research and development		213,345			1,541
Sales and marketing		464,746			87,949
Other general and administrative		622,284			345,757
Total operating expenses		1,300,375			435,247
Loss from operations		(1,011,717	)		(284,608	)
Other income (expenses)
Gain on extinguishment of debt		-			16,226
Other income (expense)		117			(331	)
Change in value of derivative liabilities		2,651			-
Interest expense		(331,154	)		(107,607	)
Total other expenses		(328,386	)		(91,712	)
Net loss	$	(1,340,103	)	$	(376,320	)
Basic and diluted net income (loss) per common share	$	(0.05	)	$	(0.01	)
Weighted average common shares outstanding:
Basic and diluted		28,951,882			25,889,334

See accompanying notes to financial statements

F-2

OXYSURE SYSTEMS INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,340,103	)	$	(376,320	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization expense		10,899			12,141
Amortization of debt discount and beneficial conversion features		288,556			95,776
Expenses paid by related parties		135,000			4,374
Stock based compensation		48,300			17,588
Forbearance expense		7,046			-
Gain on extinguishment of debt		-			(16,226	)
(Gain)/Loss on derivative revaluation		(2,651	)		-
Stock issued for services		62,670			-
Common stock warrants issued for services		4,433			-
Changes in operating assets and liabilities:
Accounts receivable		(60,035	)		(272,816	)
Inventories		(94,775	)		10,407
License fees receivable		15,000			36,692
Prepaid expenses and other current assets		(33,159	)		40,173
Accounts payable and accrued liabilities		(60,656	)		212,259
Other assets		14,632			(2,976	)
NET CASH USED IN OPERATING ACTIVITIES		(1,004,843	)		(238,928	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(3,900	)		(64,000	)
NET CASH USED IN INVESTING ACTIVITIES		(3,900	)		(64,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments made to related parties		(34,850	)		(93,500	)
Cash received from convertible notes payable		495,000			-
Payments made on convertible notes payable		-			(110,000	)
Payments on capital leases		(149	)		(576	)
Exercising of warrants		-			-
NET CASH PROVIDED BY FINANCING ACTIVITIES		460,001			(204,076	)
Net change in cash and cash equivalents		(548,742	)		(507,004	)
Cash and cash equivalents, at beginning of period		647,093			657,673
Cash and cash equivalents, at end of period	$	98,351		$	150,669
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	272		$	7,492
Income taxes	$	-		$	-
Supplemental non-cash investing and financing activities:
Conversion of convertible notes payable	$	298,619		$	25,000
Conversion of Series A preferred stock to common stock		38			25
Conversion of Series B preferred stock to common stock		127			-
Beneficial conversion feature		408,336			-

See accompanying notes to financial statements

F-3

OXYSURE® SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting policies of OxySure® Systems, Inc. (“OxySure” or the “Company”) is presented to assist in understanding the Company’s financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. These financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity.

Basis of Presentation - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. The interim financial statements include all adjustments which, in the opinion of management, are necessary in order to make the financial statements not misleading.

The accompanying Condensed Financial Statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”) and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. The Company's Condensed Financial Statements reflect all adjustments that management believes are necessary for the fair presentation of their financial position, results of operations, comprehensive loss and cash flows for the periods presented. The information at December 31, 2014 in the Company's Condensed Balance Sheet included in this quarterly report was derived from the audited Balance Sheet included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 31, 2015. Where applicable, the Company's 2014 Annual Report on Form 10-K is referred to in this quarterly report as the “2014 Annual Report.” This quarterly report should be read in conjunction with the 2014 Annual Report.

F-4

OXYSURE® SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deferred Revenue and Income - We defer revenue and income when we invoice a customer or a customer makes a payment and the requirements of revenue recognition have not been met (i.e. persuasive evidence of an arrangement exists, shipment from a company warehouse has occurred, the price is fixed or determinable and collectability is reasonably assured). Deferred Revenue was $0 for each of the periods ended March 31, 2015 and December 31, 2014, respectively.

Inventory – Our inventory consists of raw material and components for our portable oxygen systems as well as completed products and accessories.   Inventories are computed using the lower of cost or market, which approximates actual cost on a first-in first-out basis. Inventory components are parts, work-in-process and finished goods. Finished goods are reported as inventories until the point of title transfer to the customer.

Inventories as at March 31, 2015 and December 31, 2014 consisted of the following:

	March 31,		December 31,
	2015		2014
Parts inventory	$	149,954	$	133,477
Work in process		41,114		41,114
Finished goods		181,053		102,755
Total inventories	$	372,121	$	277,346

F-5

OXYSURE® SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Cash and Cash Equivalents - We invest our cash in deposits and money market funds with major financial institutions.  We place our cash investments in instruments that meet high credit quality standards, as specified in our investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue, issuer or type of instrument.

Fair Value of Financial Instruments - Our financial instruments consist principally of cash and cash equivalents, accounts receivable and accounts payable.  We believe that the recorded values of all of our other financial instruments approximate their fair values because of their nature and respective maturity dates or durations. The fair value of our long-term debt is determined by using estimated market prices. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:

Level 1:  Inputs are based on quoted market prices for identical assets or liabilities in active markets at the measurement date.

Level 2:  Inputs include quoted prices for similar assets or liabilities in active markets and/or quoted prices for identical or similar assets or liabilities in markets that are not active near the measurement date.

Level 3: Inputs include management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.

The fair value of the majority of our cash equivalents was determined based on “Level 1” inputs. We do not have any marketable securities in the “Level 2” and “Level 3” category. We believe that the recorded values of all our other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

Property and Equipment – Property and equipment are recorded at cost with depreciation and amortization provided over the shorter of the remaining lease term or the estimated useful life of the improvement ranging from three to seven years. Renewals and betterments that materially extend the life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense when incurred. Furniture and fixtures are depreciated over five years. Machinery and equipments are depreciated over five to seven years. Software is depreciated over three years.  Leasehold improvements are computed using the shorter of the estimated useful lives of the assets or the lease terms.  Depreciation expense was $3,342 and $4,631 for the three month periods ended March 31, 2015 and 2014, respectively.

Other Long-Lived Assets – We have two types of intangible assets – patents and trademarks. Intangible assets are carried at cost, net of accumulated amortization. Amortization expense for patents and trademarks was $7,557 and $7,508 for the three month periods ended March 31, 2015 and 2014, respectively.

Intangible assets with definite useful lives and other long-lived assets are tested for impairment if certain impairment indicators are identified.   Management evaluates the recoverability of its identifiable intangible assets in accordance with applicable accounting guidance, which requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Impairment charges for patents were $0 for each of the three month periods ended March 31, 2015 and 2014.

5-Year amortization expense for patents and trademarks is as follows:

2015	$	30,232
2016		30,232
2017		30,232
2018		30,232
Thereafter		234,280
	$	355,207

F-6

OXYSURE® SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2014

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Other Assets– We record Other Assets net of accumulated amortization. Amortization expense for Other Assets was $19,308 and $27,242 for the three month periods ended March 31, 2015 and 2014, respectively.

Capitalization of software: The Company accounts for internal-use software and website development costs, including the development of its partner marketplaces in accordance with ASC 350-50 (Intangibles – Website cost). The Company capitalizes internal costs consisting of payroll and direct payroll-related costs of employees who devote time to the development of internal-use software, as well as any external direct costs. It amortizes these costs over their estimated useful lives, which typically range between three to five years. The Company’s judgment is required in determining the point at which various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized. The estimated life is based on management’s judgment as to the product life cycle.

Research and Development Costs – Costs associated with the development of our products are charged to expense as incurred.  $213,345 and $1,541 were incurred in the three month periods ended March 31, 2015 and 2014, respectively.

Equity Warrants - We issued warrants to purchase shares of our common stock in connection with convertible notes. In accordance with ASC 470-20, Debt with conversions and other options, the proceeds from the notes were allocated based on the relative fair values of the notes without the warrants issued in conjunction with the notes and of the warrants themselves at the time of issuance. We record the fair value of the warrants at the time of issuance as additional paid in capital and as a debt discount to the notes.  We amortize this debt discount as interest expense over the life of the note.  Additionally, as a result of issuing the warrants with the convertible notes, a beneficial conversion option is recorded as a debt discount reflecting the incremental conversion option intrinsic value of the conversion option provided to the holders of the notes. We also amortize this debt discount as interest expense over the life of the notes.  The intrinsic value of each conversion option was calculated as the difference between the effective conversion price and the fair value of the common stock, multiplied by the number of shares into which the note is convertible.

Stock-Based Compensation – We account for share-based payments, including grants of stock options to employees, consultants and non-employees; moreover, we issue warrants to the consultants and related parties.  We are required to estimate the fair value of share-based awards and warrants on the date of grant. The value of the award is principally recognized as expense ratably over the requisite service periods. We have estimated the fair value of stock options and warrants as of the date of grant or assumption using the Black-Scholes option pricing model.

F-7

OXYSURE® SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

For the three month periods ended March 31, 2015 and 2014, stock based compensation expense was approximately $48,300 and $17,588, respectively, which consisted primarily of stock-based compensation expense related to stock options issued to the employees and recognized under GAAP.

Shipping and Handling Costs - Shipping and handling charges to customers are included in net revenues, and the associated costs incurred are recorded in cost of revenues.

Advertising Costs - Advertising costs are charged to operations when incurred.  We incurred $464,746 and $87,949 in advertising and promotion costs during the three month periods ended March 31, 2015 and 2014, respectively.

Net Income (Loss) Per Share - Basic earnings (loss) per share is computed based on the weighted average number of common shares outstanding. However, basic loss per share excludes anti-dilutive securities. Diluted earnings per share is computed based on the weighted average number of common shares outstanding, increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued, and reduced by the number of shares the Company could have repurchased from the proceeds from issuance of the potentially dilutive shares. Potentially dilutive shares of common stock include stock options and other stock-based awards granted under stock-based compensation plans and shares committed to be purchased under the employee stock purchase plan. As of March 31, 2015 there were 6,460,757 potentially dilutive shares.

Restatements and Reclassifications - Certain financial statement items have been reclassified to conform to the current periods’ presentation. These reclassifications had no impact on previously reported net loss. 

Recent Accounting Pronouncements

We have reviewed recent accounting pronouncements and concluded that they are either not applicable to our business or that no material effect is expected on the financial statements as a result of future adoption.

F-8

OXYSURE® SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

NOTE 2 – NOTES PAYABLE

We have issued warrants for the purchase of shares of our restricted common stock in connection with raising equity and debt financing and for other professional services.  The fair value of warrants issued is determined in accordance with Codification topic 470-20.

Frisco Promissory Note. On March 22, 2011 we entered into an Amended and Restated Performance Agreement with the Frisco Economic Development Corporation (“FEDC”) pursuant to an economic incentive package. In terms of the Amended and Restated Performance Agreement, the FEDC provided us with economic assistance in the form of the renewal and extension a forgivable loan of $213,000 (the “Frisco Note”) together with performance credits over 5 years, commencing on March 22, 2011 and ending on the earlier to occur of: (i) the full payment of the economic incentives; or (ii) March 31, 2016.

The Frisco Note requires varying annual principal payments through December 2015. The Frisco Note is non-interest bearing; however, interest has been imputed at 12.34% per annum. The unamortized discount at March 31, 2015 was $15,516, and the net amount of the Frisco Note as at March 31, 2015 was $88,484.

Future principal payments of the Frisco Note payable are as follows:

2015		52,000
2016		52,000
	$	104,000

During the three months ended March 31, 2015 we issued three convertible notes with a total principal value of $536,000 for $495,000 in cash. The notes contained original issuance discounts for a total of $41,000, and interest rates ranging from 8% to 12%. The maturity dates of the notes range from September 25, 2015 to February 19, 2016. The creditors have the option at any time to convert the principal and any accrued interest into common stock of the Company at an average discount rate of approximately thirty six percent off the market price of the Company’s common stock.

F-9

OXYSURE® SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

NOTE 3 - SHAREHOLDERS’ EQUITY

Preferred Shares Rights

We have 25,000,000 shares of preferred stock authorized, par value $0.0005 per share.

Series A Convertible Preferred Stock: As of March 31, 2015, the Company had authorized the issuance of 3,143,237 shares of preferred stock designated as Series A Convertible Preferred Stock (“Series A Preferred”). The original issue price of the Series A Preferred is $1.00 per share. There were 518,750 and 593,750 Series A Preferred shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively.

During the three months ended March 31, 2015 the Company did not issue any shares of the Series A Preferred, and 75,000 shares of the Series A Preferred have been converted into approximately 91,500 shares of our common stock in a cashless conversion at a conversion ratio of 1.22:1.

Series B Convertible Preferred Stock: As of March 31, 2015, we had 3,500 shares of preferred stock designated as Series B Convertible Preferred Stock (“Series B Preferred”). The original issue price of the Series B Preferred is $1,000 per share. There were 975 and 1,145 Series B Preferred shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively.

During the three months ended March 31, 2015 the Company did not issue any shares of the Series B Preferred and 170 shares of Series B Preferred were converted into 318,349 shares of our common stock.

Common Stock

The Company has authorized 100,000,000 shares of $0.0004 par value common stock.

During the three months ended March 31, 2015:

(1)	We issued 91,500 shares of common stock pursuant to the cashless conversion of 75,000 shares of Series A Preferred;
(2)	We issued 318,349 shares of common stock pursuant to the cashless conversion of 170 shares of Series B Preferred;
(3)	We issued 695,247 shares of common stock pursuant to the cashless, partial conversion of convertible notes payable and accrued interest, valued at $289,619;
(4)	We issued 88,000 shares of common stock for services valued at $62,670;
(5)	We recorded $48,300 for the computed fair value of options issued to employees, non-employee directors, and consultants, net of cancellations and forfeitures;
(6)	We recorded $4,433 for the computed fair value of warrants issued for services; and
(7)	We recorded $408,336 in connection with beneficial conversion features.

As of March 31, 2015 we had approximately 29,630,026 shares of common stock issued and outstanding.

F-10

OXYSURE® SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

NOTE 4 - STOCK OPTIONS AND WARRANTS

Equity Incentive Plans

In April 2004, our Board of Directors and the stockholders at that time approved the adoption of a Voting Stock Option Plan (“the Plan”), which provides for the issuance of stock options to eligible employees, consultants, Board members and Advisory Board members of the Company to acquire up to a maximum of 5,000,000 shares of common stock.

Our Board of Directors, which determines the number of options that will be granted, the effective dates of the grants, the option process and the vesting schedules, administers the Plan. In the absence of an established market for the common stock of the Company, the Board of Directors determines the fair market value of our common stock. Options generally expire between five and ten years from the date of grant and automatically terminate 90 days after such optionee ceases to be an eligible individual under the Plan other than by reason of death or disability.

The portion of options granted that is not exercisable on the date the optionee ceases to be an eligible individual under the Plan by reason other than death, shall terminate and be forfeited to the Company on the date of such cessation. An optionee has no right as a stockholder with respect to any shares covered by the options granted to him until a certificate representing such shares is issued to them.

Stock Options

The following table summarizes information about the number and weighted average of the options that were forfeited or expired under the Plan as at March 31, 2015:

	Employee				Non-Employee
			Weighted				Weighted
	Number		Average		Number		Average		Combined
	Of		Exercise		Of		Exercise		Total
Outstanding at December 31, 2014		1,707,488	$	0.31		-	$	-		1,707,488
Granted		312,500	$	.96		-	$	-		312,500
Exercised		-	$	-		-	$	-		-
Forfeited/Cancelled		-	$	-		-	$	-		-
Outstanding at March 31, 2015		2,019,988	$	0.41		-	$	-		2,019,988

The number of stock options exercisable at March 31, 2015 was 1,474,988.

F-11

OXYSURE® SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

NOTE 4 - STOCK OPTIONS AND WARRANTS (CONTINUED)

We used the following assumptions to estimate the fair value of options granted under the Plan for the three months ended March 31, 2015 and 2014:

	Equity Incentive Plans for Quarter Ended March 31,
	2014			2013
Expected terms (in years)		5-10			5-10
Volatility (weighted ave.)		83.79	%		40.45	%
Risk-free interest rate (weighted ave.)		0.91%-1.07	%		1.05%-1.74	%
Expected dividend rate		0	%		0	%

The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. The expected term is based on the observed and expected time to exercise and post-vesting cancellations of options by optionees.  We use historical volatility in deriving our expected volatility assumption because it believes that future volatility over the expected term of the stock options is not likely to differ from the past.

The expected dividend assumption is based on our history and expectation of dividend payouts.  The fair value of the shares of common stock underlying the stock options has historically been determined by the board of directors. On or before February 2012, when our common stock commenced trading on the over the counter bulletin board (OTCQB), there has been no public market for our common stock. Consequently, the board of directors has historically determined the fair value of the common stock at the time of grant of the option by considering a number of objective and subjective factors including valuation of comparable companies, operating and financial performance, the lack of liquidity of capital stock and general and industry specific economic outlook, amongst other factors.  

FASB ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company only records stock-based compensation expense for awards that are expected to vest. While we generally consider historical forfeitures in its estimates, judgment is also required in estimating the amount of stock-based awards that are expected to be forfeited. The Company’s estimates for forfeitures may differ from actual forfeitures. If actual results differ significantly from these estimates, stock-based compensation expense and its results of operations could be materially impacted when the Company records a true-up for the difference in the period that the awards vest. We adjust stock-based compensation expense based on our actual forfeitures on an annual basis, if necessary.

Stock compensation cost, using the graded vesting attribute method in accordance with Codification topic 718, is recognized over the requisite service period, generally 5 years, during which each tranche of shares is earned (zero, one, two, three, and four years).  The value of each tranche is generally amortized on a straight-line basis.  For the three months ended March 31, 2015 and 2014, stock based compensation expense was approximately $48,300 and $17,588, respectively, which consisted primarily of stock-based compensation expense related to stock options recognized under GAAP issued to employees.  For each of the three months ended March 31, 2015 and 2014, the number of options exercised was 0.

Compensation expense is recognized only for the portion of stock options that are expected to vest, assuming an expected forfeiture rate in determining stock-based compensation expense, which could affect the stock-based compensation expense recorded if there is a significant difference between actual and estimated forfeiture rates. As of March 31, 2015, total unrecognized compensation cost related to stock-based awards granted to employees and non-employee directors was $84,328.

F-12

OXYSURE® SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

NOTE 4 - STOCK OPTIONS AND WARRANTS (CONTINUED)

Warrants.

The following table summarizes our warrant activities for the three months ended March 31, 2015:

				Weighted
	Number			Average
	Of			Exercise
	Warrants			Price
Outstanding at December 31, 2014		3,569,260		$	1.37
Granted		15,000		$	1.20
Exercised		-		$	-
Forfeited/Cancelled		(270,000	)	$	2.50
Outstanding at March 31, 2015		3,314,260		$	1.28

The number of warrants exercisable at March 31, 2015 was 3,314,260.

NOTE 5 – RELATED PARTY TRANSACTIONS

A summary of the related party financings and notes as at March 31, 2015 is as follows:

Related party	Julian Ross (1)
Amount	$	255,000
Stated interest rate		0	%
Maturity		n/a

(1) Our CEO, Mr. Ross provides us shareholder cash advances and other consideration from time to time to fund working capital.

F-13

OXYSURE® SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

NOTE 6 – OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us.

NOTE 7 – SEGMENT INFORMATION

We are organized as, and operate in, one reportable segment: the development, distribution and sale of specialty respiratory products and related medical products, accessories, and services. Our chief operating decision-maker is our Chief Executive Officer. Our Chief Executive Officer reviews financial information presented for purposes of evaluating financial performance and allocating resources, accompanied by information about revenue by geographic regions. Our assets are primarily located in the United States of America and not allocated to any specific region and we do not measure the performance of our geographic regions based upon asset-based metrics. Therefore, geographic information is presented only for revenue. Revenue by geographic region is based on the ship to address on our customer orders.

The following presents total revenue by geographic region for the three month periods ended March 31, 2015 and 2014:

	Three months ended March 31,
	2015		2014
Product Revenue:
United States - product sales	$	624,514	$	301,603
ROW - product sales		-		37,126
ROW - license fees/service revenue		-		17,500
Totals	$	624,514	$	356,229

NOTE 8 – GOING CONCERN

Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Historically we have been suffering from recurring loss from operations. We have an accumulated deficit of $19,381,311 and $18,041,208 at March 31, 2015 and December 31, 2014, respectively, and stockholders’ equity of $557,042 and $1,074,787 as of March 31, 2015 and December 31, 2014, respectively. We require substantial additional funds to manufacture and commercialize our products. Our management is actively seeking additional sources of equity and/or debt financing; however, there is no assurance that any additional funding will be available.

In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying March 31, 2015 balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, and to generate cash from future operations. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be unable to continue in existence.

F-14

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis summarizes the significant factors affecting our results of operations, financial conditions and liquidity position for the three months ended March 31, 2015 and 2014, and should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this report.

Forward-Looking Statements

Statements and information included in this Quarterly Report on Form 10-Q that are not purely historical, including, without limitation, statements that relate to the Company's expectations with regard to the future impact on the Company's results from new products in development, are forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. When used in this report, words such as “believe,” “expect,” “intend,” “goal,” “plan,” “pursue,” “likely,” “believe,” “project,” “anticipate,” “intend,” “estimate,” “evaluate,” “opinion,” “may,” “could,” “future,” “potential,” “probable,” “if,” “will” and similar expressions generally identify forward-looking statements. These statements are subject to risks and uncertainties.

Forward-looking statements in this Quarterly Report on Form 10-Q represent our beliefs, projections and predictions about future events. These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievement described in or implied by such statements. Actual results may differ materially from the expected results described in our forward-looking statements, including with respect to the correct measurement and identification of factors affecting our business or the extent of their likely impact, the accuracy and completeness of publicly available information relating to the factors upon which our business strategy is based, or the success of our business. The factors or uncertainties that could cause actual results, performance or achievement to differ materially from forward-looking statements contained in this report can be found in our filings with the Securities and Exchange Commission, including our filings on Form 10-K.

Highlights

Some of our key financial performance statistics for the three months ended March 31, 2015, as compared to the same metric for the three months ended March 31, 2015, include the following:

● Total revenue increased by approximately 75% to $624,514 as compared to $356,229 for the prior period;

● Net loss increased by approximately $963,783 to $1,340,103 or $0.05 per share for the quarter as compared to a loss of  $376,320 or $0.01 per share during the prior period; and

● General and administrative expense increased 80% to $622,287 as compared to $345,757 for the prior period.

Some of our key non-financial highlights and milestones achieved during the first quarter of 2015 include the following:

● We hired territory managers in several key markets across the country, including Michigan, Arizona, Texas, Georgia, Colorado and Pennsylvania;

● We welcomed Thomas Cox, an advisor to leading private equity firms to our Board of Directors.

● We announced various new US distribution agreements, including Stop Heart Attack, Team Life, Health Education Services, Chris Gardner & Associates and Cardio Partner Resources; and

● We announced a $1.575 million institutional financing.

2

Overview

OxySure Systems, Inc. was formed on January 15, 2004 as a Delaware “C” Corporation for the purpose of developing products with the capability of generating medical grade oxygen “on demand,” without the necessity of storing oxygen in compressed tanks.  Our technology, process and methodologies involve the creation of medically pure (USP) oxygen from two dry, inert powders.  We believe that other available chemical oxygen generating technologies contain hazards that make them commercially unviable for broad-based emergency use by lay rescuers or the general public.  Our launch product is the OxySure Model 615 portable emergency oxygen system.  We believe that the OxySure Model 615 is currently the only product on the market that can be safely pre-positioned in public and private venues for emergency administration of medical oxygen by lay persons, without the need for training.

To date, we have been issued 9 patents and we have other patents pending on this process and technology that we believe is revolutionizing the emergency/short duration oxygen supply marketplace. We believe that OxySure makes the delivery devices lighter, safer, more affordable and easier to use. We believe our products can improve access to emergency oxygen that affects the survival, recovery and safety of individuals in several areas of need: (1) Public and private places and settings where medical emergencies can occur; (2) Individuals at risk for cardiac, respiratory or general medical distress needing immediate help prior to emergency medical care arrival; and (3) Those requiring immediate protection and escape from exposure situations or oxygen-deficient situations in industrial, mining, military, or other “Immediately Dangerous to Life or Health” (IDLH) environments.

The OxySure Model 615 emergency oxygen device was cleared by the Food and Drug Administration (“FDA”) (510k, Class II) for over-the-counter purchase in December 2005. We believe it bridges the gap between the onset of a medical emergency and the time first responders arrive on the scene. We believe it allows a lay rescuer – a bystander or loved one – to administer medical oxygen during those first, critical minutes after an emergency occurs, improving medical outcomes and saving lives in the process. In March 2014 we also received CE Marking approval for Model 615, allowing us to begin commercializing it in the European Union.

We have diversified our product portfolio to provide include solutions focused on the emergency medical preparedness and respiratory needs of our education, commercial and government customers. Our solutions include Automated External Defibrillators (AEDs) and accessories, resuscitation equipment, and respiratory and monitoring equipment and supplies.

3

The OxySure Strategy

The following summarizes the principal elements of our strategy:

● We launched the OxySure Model 615 into the K-12 education market in the United States, and we subsequently diversified into other institutional markets, such as colleges, churches and places of worship, manufacturing facilities and other commercial and municipal buildings. We plan to continue to pursue institutional customers in these and other vertical markets, both in the United States and internationally.

● We believe that Model 615 is a natural complement and companion product to an Automated External Defibrillator (AED). We plan to continue to market Model 615 as a companion product to AEDs, and our goal in the foreseeable future is to pursue the placement of the OxySure Model 615 next to as many AEDs as possible, in the United States as well as internationally. We believe in the long term, however, Model 615 has the potential to become a standard issue item for public and private settings, just like a fire extinguisher.

● We plan to continue to leverage our core competencies in oxygen, breathing technologies, research and manufacturing to pursue revenue opportunities in new vertical markets, including the military.

● We plan to continue to build our sales force by recruiting dedicated sales professionals focusing on business to business sales, former first responders, paramedics and firefighters as well individuals from other medical, first aid and safety sales areas to market our products and craft solutions for our customers.

● Our channel strategy includes leveraging distribution partnerships to enhance market penetration, and we plan to increase our efforts to partner with distributors, including distributors of AEDs, safety products and medical devices.  We plan to invest resources in training and tools for our distribution partners’ sales, systems and support organizations, in order to improve the overall efficiency and effectiveness of these partnerships.

● We plan to continue our increasing efforts to promote market awareness and education of our products and their critical need, and our efforts may include partnerships with industry, medical thought leaders, and community and advocacy organizations.

● We plan to market to “at risk” markets – people with conditions such as asthma and other respiratory and medical conditions where supplemental or emergency oxygen is either required or desired – by way of direct to consumer campaigns utilizing television, print and online media to increase sales, awareness and brand recognition.

● We plan to pursue market catalysts such as a legislative agenda for state and federal mandates, medical reimbursement for at risk markets, and insurance underwriting benefits and discounts for product users.

● We plan to continue to diversify our product offerings through the addition of complimentary or additive products and solutions that enhance our core product usability, feasibility, appeal or application, or that enhances our ability to access or add value to existing and new customers. In addition, we plan to continue our development efforts focused on developing new products incorporating our core “oxygen from powder” technology for other vertical markets, such as aviation, mining, and sports and recreation as applicable.

● We plan to pursue strategic alliances where applicable to accelerate our growth and access to new customers, sales channels, markets and products.

4

Results of Operations

You should read the selected financial data set forth below along with our discussion and our financial statements and the related notes. We have derived the financial data from our unaudited financial statements. We believe the financial data shown in the table below include all adjustments consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of such information. Operating results for the period are not necessarily indicative of the results that may be expected in the future.

	Three months ended March 31,
	2015			2014
Net income loss	$	(1,340,103	)	$	(376,320	)
Shares used in computing basic loss per share amounts (weighted ave.)		28,951,882			25,889,334
Shares used in computing diluted loss per share amounts (weighted ave.)		28,951,882			25,889,334
Net loss per share:
Basic and Diluted	$	(0.05	)	$	(0.01	)

Results for the Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014 (unaudited)

Revenues

We had $624,514 in revenues from operations for the three months ended March 31, 2015 as compared to revenues of $356,229 for the three months ended March 31, 2014.  The increase in revenues is primarily attributable to an increase in US product sales and military products.

Expenses

Total expenses for the three months ended March 31, 2015 were $1,968,590, which amount includes $1,300,375 of operating expenses, $335,856 in cost of goods sold, and $331,154 in interest expense, as compared to total expenses for the three months ended March 31, 2014 of $748,775, which amount includes $435,247 of operating expenses, $205,590 in cost of goods sold, and $107,607 in interest expense. The increase in total selling, general and administrative expenses is primarily attributable to an increase in advertising and promotional expense, an increase in other general and administrative expense, and an increase in interest expense, and an increase in research and development expense. The increase in interest expense is primarily attributable to an increase in interest expense related to convertible notes.

Research and Development

Research and development expenses of $213,345 and $1,541 were incurred in the three months periods ended March 31, 2015 and 2014, respectively.  The increase in research and development expense is primarily attributable to an increase in research and development expense associated with products for military markets.

Net Income (Loss)

Net loss for the three months ended March 31, 2015 was $1,340,103 and basic and diluted net loss per share was $(0.05) as compared to a net loss for the three months ended March 31, 2014 of $ $376,320 and basic and diluted net loss per share of $(0.01). The increase in net loss during the period ended March 31, 2015 as compared to the three months ended March 31, 2014 is primarily due to the combined effect of an increase in research and development expense, an increase in interest expense, an increase in sales and marketing expense and an increase in other general and administrative expenses, offset by an increase in revenues and gross margin.

5

Liquidity and Capital Resources

We had a cash balance of approximately $98,351 as of March 31, 2015, as compared to $647,093 as of December 31, 2014.  Our funds are kept in financial institutions located in the United States of America.

We had a working capital deficit of $187,358 as of March 31, 2015 as compared to a working capital of $418,734 as of December 31, 2014.

We had total notes payable of $790,989 and $647,829 as of March 31, 2015 and December 31, 2014, respectively. The increase in Notes Payable was primarily due to an increase new convertible notes payable offset by partial note conversions into common stock.

We generally provide our customers with terms of up to 30 days on our accounts receivable.  In some cases we require prepayment, depending on history or credit review.  Further, we generally require pre-payment on orders shipped to international destinations.  Our accounts receivable, net of allowances, were $429,610 and $369,575 as at March 31, 2015 and December 31, 2014, respectively.

Since inception, we have been engaged primarily in product research and development, obtaining certain regulatory approvals, investigating markets for our products, developing manufacturing and supply chain partners, developing our production capability, and developing distribution, licensing and other channel relationships. In the course of funding research and development activities, we have sustained operating losses since inception and have an accumulated deficit of $19,381,311 at March 31, 2015.

We completed product development of our launch product, the OxySure Model 615 and launched sales thereof in 2008.  We have and will continue to use significant capital to manufacture and commercialize our products.  These factors raise doubt about our ability to continue as a going concern.  In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans or through additional sales of our common stock.

During the remainder of 2015 and 2016, we will need additional capital to market and sell our products, and to further develop and enhance our current product offerings, introduce new products and address unanticipated competitive threats, technical problems, economic conditions or other requirements.  We estimate that we will require approximately $2.97 million over the next 12 months to remain viable.  There is no assurance that we will be successful in raising this additional capital or in achieving profitable operations.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.  However, there can be no assurance that any additional financing will be available to us.  Additional equity financing may involve substantial dilution to our then existing stockholders.  In the event we are unable to raise additional capital, we may be required to substantially reduce or curtail our activities.

6

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our President and Chief Financial Officer has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of the end of period covered by this report.  Based upon such evaluation,  the President and Chief Financial Officer concluded that our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

7

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is subject to litigation in the normal course of business, none of which management believes will have a material adverse effect on the Company’s financial statements.

On or about December 13 of 2013, Wall Street Buy Sell Hold, Inc., (“WSBSH”) filed a lawsuit against the Company in the New York Supreme Court, Nassau County. The suit seeks damages in the form of money, stock and warrants for breach of a marketing agreement entered into on October 22, 2012 and another entered into on March 11, 2013. We have answered the complaint and filed a counterclaim against WSBSH seeking the return of all moneys and shares we paid or transferred to WSBSH, as well as punitive damages for fraud.

On May 8, 2015, we filed a lawsuit against Wall Street Buy Sell Hold, Inc., and its principals Christopher and Jerry Castaldo in federal court in the Eastern District of Texas. The suit arises out of certain agreements made between the defendants and us. These and/or similar agreements are also the subject of parallel breach of contract actions between us and WSBSH in the 2013 suit in New York state.

The core of the Texas federal suit is that WSBSH attempted to contract to provide broker/dealer services despite the fact that, unbeknownst to us, its principal was a disgraced former broker who was not licensed to provide such services under state and federal law. Irrespective of the defendants' failed performance, the Texas suit seeks the return of the compensation and shares we paid and rescission of their illegal contracts, which are voidable at the option of the innocent party, as well as our attorney's fees.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None. 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following Exhibits are filed herein:

No.	Title
31.1	Certification of President Pursuant to the Securities Exchange Act of 1934, Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to the Securities Exchange Act of 1934, Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

8

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DATED: May 18, 2015	OXYSURE SYSTEMS, INC.
	/s/ Julian T. Ross
	BY: Julian T. Ross
	ITS: President and Chief Financial Officer
	(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

9

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRESIDENT

PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,

RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Julian T. Ross, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2015 of OxySure Systems, Inc.

2. Based upon my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based upon my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure control and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 18, 2015

/s/ Julian T. Ross

Julian T. Ross,

President

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,

RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Julian T. Ross, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2015 of OxySure Systems, Inc.

2. Based upon my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based upon my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure control and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 18, 2015

/s/ Julian T. Ross

Julian T. Ross,

Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of OxySure Systems, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Julian T. Ross, President and Chief Financial Officer of the Company, respectively, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: May 18, 2015

/s/ Julian T. Ross

Julian T. Ross,

President and Chief Financial Officer

XML

Shareholders' Equity (Details) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Shareholders' Equity (Textual)
Preferred stock, shares authorized	25,000,000		25,000,000
Preferred stock, par value	$ 0.0005		$ 0.0005
Common stock, shares authorized	100,000,000		100,000,000
Common stock, par value	$ 0.0004		$ 0.0004
Preferred stock converted to common stock, Shares
Common stock issued for services, Shares	88,000
Common stock issued for services	$ 62,670
Beneficial conversion features	408,336
Common stock issued upon conversion of convertible notes
Common stock issued upon conversion of convertible notes, Shares	695,247
Common stock issued for cash and warrants
Warrant fair value	4,433
Fair value of options issued to employees	48,300
Common stock, Shares issued	29,630,026		28,438,631
Common stock, Shares outstanding	29,630,026		28,438,631
Series A Preferred Stock [Member]
Shareholders' Equity (Textual)
Preferred Stock, shares issued	518,750		593,750
Preferred stock, shares outstanding	518,750		593,750
Series A preferred shares converted to common stock	75,000
Preferred stock converted into common stock	91,500
Conversion ratio	1.22
Preferred stock converted to common stock, Shares	75,000
Series B Preferred Stock [Member]
Shareholders' Equity (Textual)
Preferred Stock, shares issued	975		1,145
Preferred stock, shares outstanding	975		1,145
Preferred stock converted into common stock	170
Series B preferred authorized	3,500
Common stock issued upon conversion of convertible preferred stock, Shares	318,349
Preferred stock converted to common stock, Shares	170
Common stock [Member]
Shareholders' Equity (Textual)
Common stock issued upon conversion of convertible notes	$ 289,619
Common stock [Member] | Series A Preferred Stock [Member]
Shareholders' Equity (Textual)
Preferred stock, shares authorized	3,143,237
Preferred stock, par value	$ 1.00
Common stock [Member] | Series B Preferred Stock [Member]
Shareholders' Equity (Textual)
Preferred stock, par value	$ 1,000

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Stock Options and Warrants

3 Months Ended

Mar. 31, 2015

Stock Options and Warrants [Abstract]

STOCK OPTIONS AND WARRANTS

NOTE 4 - STOCK OPTIONS AND WARRANTS

Equity Incentive Plans

In April 2004, our Board of Directors and the stockholders at that time approved the adoption of a Voting Stock Option Plan (“the Plan”), which provides for the issuance of stock options to eligible employees, consultants, Board members and Advisory Board members of the Company to acquire up to a maximum of 5,000,000 shares of common stock.

Our Board of Directors, which determines the number of options that will be granted, the effective dates of the grants, the option process and the vesting schedules, administers the Plan. In the absence of an established market for the common stock of the Company, the Board of Directors determines the fair market value of our common stock. Options generally expire between five and ten years from the date of grant and automatically terminate 90 days after such optionee ceases to be an eligible individual under the Plan other than by reason of death or disability.

The portion of options granted that is not exercisable on the date the optionee ceases to be an eligible individual under the Plan by reason other than death, shall terminate and be forfeited to the Company on the date of such cessation. An optionee has no right as a stockholder with respect to any shares covered by the options granted to him until a certificate representing such shares is issued to them.

Stock Options

The following table summarizes information about the number and weighted average of the options that were forfeited or expired under the Plan as at March 31, 2015:

	Employee				Non-Employee
			Weighted				Weighted
	Number		Average		Number		Average		Combined
	Of		Exercise		Of		Exercise		Total
Outstanding at December 31, 2014		1,707,488	$	0.31		-	$	-		1,707,488
Granted		312,500	$	.96		-	$	-		312,500
Exercised		-	$	-		-	$	-		-
Forfeited/Cancelled		-	$	-		-	$	-		-
Outstanding at March 31, 2015		2,019,988	$	0.41		-	$	-		2,019,988

The number of stock options exercisable at March 31, 2015 was 1,474,988.

We used the following assumptions to estimate the fair value of options granted under the Plan for the three months ended March 31, 2015 and 2014:

	Equity Incentive Plans for Quarter Ended March 31,
	2015			2014
Expected terms (in years)		5-10			5-10
Volatility (weighted ave.)		83.79	%		40.45	%
Risk-free interest rate (weighted ave.)		0.91%-1.07	%		1.05%-1.74	%
Expected dividend rate		0	%		0	%

The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. The expected term is based on the observed and expected time to exercise and post-vesting cancellations of options by optionees.  We use historical volatility in deriving our expected volatility assumption because it believes that future volatility over the expected term of the stock options is not likely to differ from the past.

The expected dividend assumption is based on our history and expectation of dividend payouts.  The fair value of the shares of common stock underlying the stock options has historically been determined by the board of directors. On or before February 2012, when our common stock commenced trading on the over the counter bulletin board (OTCQB), there has been no public market for our common stock. Consequently, the board of directors has historically determined the fair value of the common stock at the time of grant of the option by considering a number of objective and subjective factors including valuation of comparable companies, operating and financial performance, the lack of liquidity of capital stock and general and industry specific economic outlook, amongst other factors.  

FASB ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company only records stock-based compensation expense for awards that are expected to vest. While we generally consider historical forfeitures in its estimates, judgment is also required in estimating the amount of stock-based awards that are expected to be forfeited. The Company’s estimates for forfeitures may differ from actual forfeitures. If actual results differ significantly from these estimates, stock-based compensation expense and its results of operations could be materially impacted when the Company records a true-up for the difference in the period that the awards vest. We adjust stock-based compensation expense based on our actual forfeitures on an annual basis, if necessary.

Stock compensation cost, using the graded vesting attribute method in accordance with Codification topic 718, is recognized over the requisite service period, generally 5 years, during which each tranche of shares is earned (zero, one, two, three, and four years).  The value of each tranche is generally amortized on a straight-line basis.  For the three months ended March 31, 2015 and 2014, stock based compensation expense was approximately $48,300 and $17,588, respectively, which consisted primarily of stock-based compensation expense related to stock options recognized under GAAP issued to employees.  For each of the three months ended March 31, 2015 and 2014, the number of options exercised was 0.

Compensation expense is recognized only for the portion of stock options that are expected to vest, assuming an expected forfeiture rate in determining stock-based compensation expense, which could affect the stock-based compensation expense recorded if there is a significant difference between actual and estimated forfeiture rates. As of March 31, 2015, total unrecognized compensation cost related to stock-based awards granted to employees and non-employee directors was $84,328.

Warrants.

The following table summarizes our warrant activities for the three months ended March 31, 2015:

				Weighted
	Number			Average
	Of			Exercise
	Warrants			Price
Outstanding at December 31, 2014		3,569,260		$	1.37
Granted		15,000		$	1.20
Exercised		-		$	-
Forfeited/Cancelled		(270,000	)	$	2.50
Outstanding at March 31, 2015		3,314,260		$	1.28

The number of warrants exercisable at March 31, 2015 was 3,314,260.

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Stock Options and Warrants (Details Textual) (USD $)	1 Months Ended	3 Months Ended
	Apr. 30, 2004	Mar. 31, 2015	Mar. 31, 2014
Stock option and warrants (Textual)
Maximum number of shares acquired under voting stock option plan	5,000,000
Expiration period of option, Maximum	10 years
Expiration period of option, Minimum	5 years
Termination period of option for ineligible individual	90 days
Stock compensation expense recognition requisite service period		5 years
Stock based compensation expense		$ 48,300	$ 17,588
Number of stock options exercisable		1,474,988
Number of warrants exercisable		3,314,260
Employee Stock Option [Member]
Stock option and warrants (Textual)
Unrecognized compensation costs related to non-vested stock option		$ 84,328
Stock option/warrant exercised

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Stock Options and Warrants (Details 2) (Warrant [Member], USD $)	3 Months Ended
	Mar. 31, 2015
Warrant [Member]
Summary of warrants activity
Outstanding Options/Warrants, beginning balance	3,569,260
Outstanding Options/Warrants, Weighted Average Exercise Price, beginning balance	$ 1.37
Granted	15,000
Granted, Weighted Average Exercise Price	$ 1.20
Exercised
Exercised, Weighted Average Exercise Price
Forfeited/Cancelled	(270,000)
Forfeited/Cancelled, Weighted Average Exercise Price	$ 2.50
Outstanding Options/Warrants, ending balance	3,314,260
Outstanding Options/Warrants, Weighted Average Exercise Price, ending balance	$ 1.28

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Related Party Transactions (Details) (Julian Ross [Member], USD $)	3 Months Ended
	Mar. 31, 2015
Julian Ross [Member]
Summary of related party financings and notes
Amount	$ 255,000	[1]
Stated interest rate	0.00%	[1]
Maturity	n/a	[1]

[1] (1) Our CEO, Mr. Ross provides us shareholder cash advances and other consideration from time to time to fund working capital.

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Segment Information (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Components of revenue by geographic region
Total revenues	$ 624,514	$ 356,229
United States revenues [Member]
Components of revenue by geographic region
Total revenues	624,514	301,603
Row Product Sales [Member]
Components of revenue by geographic region
Total revenues		37,126
ROW - license fees/service revenue [Member]
Components of revenue by geographic region
Total revenues		$ 17,500

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Shareholders' Equity

3 Months Ended

Mar. 31, 2015

Shareholders' Equity [Abstract]

SHAREHOLDERS' EQUITY

NOTE 3 - SHAREHOLDERS’ EQUITY

Preferred Shares Rights

We have 25,000,000 shares of preferred stock authorized, par value $0.0005 per share.

Series A Convertible Preferred Stock: As of March 31, 2015, the Company had authorized the issuance of 3,143,237 shares of preferred stock designated as Series A Convertible Preferred Stock (“Series A Preferred”). The original issue price of the Series A Preferred is $1.00 per share. There were 518,750 and 593,750 Series A Preferred shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively.

During the three months ended March 31, 2015 the Company did not issue any shares of the Series A Preferred, and 75,000 shares of the Series A Preferred have been converted into approximately 91,500 shares of our common stock in a cashless conversion at a conversion ratio of 1.22:1.

Series B Convertible Preferred Stock: As of March 31, 2015, we had 3,500 shares of preferred stock designated as Series B Convertible Preferred Stock (“Series B Preferred”). The original issue price of the Series B Preferred is $1,000 per share. There were 975 and 1,145 Series B Preferred shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively.

During the three months ended March 31, 2015 the Company did not issue any shares of the Series B Preferred and 170 shares of Series B Preferred were converted into 318,349 shares of our common stock.

Common Stock

The Company has authorized 100,000,000 shares of $0.0004 par value common stock.

During the three months ended March 31, 2015:

(1)	We issued 91,500 shares of common stock pursuant to the cashless conversion of 75,000 shares of Series A Preferred;
(2)	We issued 318,349 shares of common stock pursuant to the cashless conversion of 170 shares of Series B Preferred;
(3)	We issued 695,247 shares of common stock pursuant to the cashless, partial conversion of convertible notes payable and accrued interest, valued at $289,619;
(4)	We issued 88,000 shares of common stock for services valued at $62,670;
(5)	We recorded $48,300 for the computed fair value of options issued to employees, non-employee directors, and consultants, net of cancellations and forfeitures;
(6)	We recorded $4,433 for the computed fair value of warrants issued for services; and
(7)	We recorded $408,336 in connection with beneficial conversion features.

As of March 31, 2015 we had approximately 29,630,026 shares of common stock issued and outstanding.

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Going Concern (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Going Concern (Textual)
Accumulated deficit	$ (19,381,311)	$ (18,041,208)
Stockholders' deficit	$ 557,042	$ 1,074,787

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Balance Sheets (USD $)	Mar. 31, 2015	Dec. 31, 2014
Current assets
Cash and cash equivalents	$ 98,351	$ 647,093
Accounts receivable, net	429,610	369,575
Inventories	372,121	277,346
License fee receivable	448,308	463,308
Prepaid expenses and other current assets	86,747	53,588
Total current assets	1,435,137	1,810,910
Property and equipment, net	92,095	91,537
Intangible assets, net	355,207	362,764
Other assets	306,893	246,237
TOTAL ASSETS	2,189,332	2,511,448
Current liabilities
Accounts payable and accrued expenses	557,942	558,338
Related party payable	255,000	154,850
Capital leases - current		149
Notes payable - current, net of discount	88,484	40,897
Convertible notes payable, net of discount	702,505	606,932
Derivative liability	28,359	31,010
Total current liabilities	1,632,290	1,392,176
Long-term liabilities
Notes payable, net of discount		44,484
Total long-term liabilities		44,484
TOTAL LIABILITIES	1,632,290	1,436,661
COMMITMENTS AND CONTINGENCY (NOTE 9)
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.0005 per share; 25,000,000 shares authorized;
Common stock, par value $0.0004 per share; 100,000,000 shares authorized; 29,630,026 shares of voting common stock issued and outstanding as of March 31, 2015 and 28,438,631 shares issued and outstanding as of December 31, 2014	11,855	11,377
Additional Paid-in Capital	19,926,240	19,104,322
Accumulated deficit	(19,381,311)	(18,041,208)
TOTAL STOCKHOLDERS' EQUITY	557,042	1,074,787
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	2,189,332	2,511,448
Series A Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.0005 per share; 25,000,000 shares authorized;	258	296
Series B Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.0005 per share; 25,000,000 shares authorized;

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2015

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting policies of OxySure® Systems, Inc. (“OxySure” or the “Company”) is presented to assist in understanding the Company’s financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. These financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity.

Basis of Presentation - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. The interim financial statements include all adjustments which, in the opinion of management, are necessary in order to make the financial statements not misleading.

The accompanying Condensed Financial Statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”) and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. The Company's Condensed Financial Statements reflect all adjustments that management believes are necessary for the fair presentation of their financial position, results of operations, comprehensive loss and cash flows for the periods presented. The information at December 31, 2014 in the Company's Condensed Balance Sheet included in this quarterly report was derived from the audited Balance Sheet included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 31, 2015. Where applicable, the Company's 2014 Annual Report on Form 10-K is referred to in this quarterly report as the “2014 Annual Report.” This quarterly report should be read in conjunction with the 2014 Annual Report.

Deferred Revenue and Income - We defer revenue and income when we invoice a customer or a customer makes a payment and the requirements of revenue recognition have not been met (i.e. persuasive evidence of an arrangement exists, shipment from a company warehouse has occurred, the price is fixed or determinable and collectability is reasonably assured). Deferred Revenue was $0 for each of the periods ended March 31, 2015 and December 31, 2014, respectively.

Inventory – Our inventory consists of raw material and components for our portable oxygen systems as well as completed products and accessories.   Inventories are computed using the lower of cost or market, which approximates actual cost on a first-in first-out basis. Inventory components are parts, work-in-process and finished goods. Finished goods are reported as inventories until the point of title transfer to the customer.

Inventories as at March 31, 2015 and December 31, 2014 consisted of the following:

	March 31,		December 31,
	2015		2014
Parts inventory	$	149,954	$	133,477
Work in process		41,114		41,114
Finished goods		181,053		102,755
Total inventories	$	372,121	$	277,346

Cash and Cash Equivalents - We invest our cash in deposits and money market funds with major financial institutions.  We place our cash investments in instruments that meet high credit quality standards, as specified in our investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue, issuer or type of instrument.

Fair Value of Financial Instruments - Our financial instruments consist principally of cash and cash equivalents, accounts receivable and accounts payable.  We believe that the recorded values of all of our other financial instruments approximate their fair values because of their nature and respective maturity dates or durations. The fair value of our long-term debt is determined by using estimated market prices. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:

Level 1:  Inputs are based on quoted market prices for identical assets or liabilities in active markets at the measurement date.

Level 2:  Inputs include quoted prices for similar assets or liabilities in active markets and/or quoted prices for identical or similar assets or liabilities in markets that are not active near the measurement date.

Level 3: Inputs include management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.

The fair value of the majority of our cash equivalents was determined based on “Level 1” inputs. We do not have any marketable securities in the “Level 2” and “Level 3” category. We believe that the recorded values of all our other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

Property and Equipment – Property and equipment are recorded at cost with depreciation and amortization provided over the shorter of the remaining lease term or the estimated useful life of the improvement ranging from three to seven years. Renewals and betterments that materially extend the life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense when incurred. Furniture and fixtures are depreciated over five years. Machinery and equipments are depreciated over five to seven years. Software is depreciated over three years.  Leasehold improvements are computed using the shorter of the estimated useful lives of the assets or the lease terms.  Depreciation expense was $3,342 and $4,631 for the three month periods ended March 31, 2015 and 2014, respectively.

Other Long-Lived Assets – We have two types of intangible assets – patents and trademarks. Intangible assets are carried at cost, net of accumulated amortization. Amortization expense for patents and trademarks was $7,557 and $7,508 for the three month periods ended March 31, 2015 and 2014, respectively.

Intangible assets with definite useful lives and other long-lived assets are tested for impairment if certain impairment indicators are identified.   Management evaluates the recoverability of its identifiable intangible assets in accordance with applicable accounting guidance, which requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Impairment charges for patents were $0 for each of the three month periods ended March 31, 2015 and 2014.

5-Year amortization expense for patents and trademarks is as follows:

2015	$	30,232
2016		30,232
2017		30,232
2018		30,232
Thereafter		234,280
	$	355,207

Other Assets– We record Other Assets net of accumulated amortization. Amortization expense for Other Assets was $19,308 and $27,242 for the three month periods ended March 31, 2015 and 2014, respectively.

Capitalization of software: The Company accounts for internal-use software and website development costs, including the development of its partner marketplaces in accordance with ASC 350-50 (Intangibles – Website cost). The Company capitalizes internal costs consisting of payroll and direct payroll-related costs of employees who devote time to the development of internal-use software, as well as any external direct costs. It amortizes these costs over their estimated useful lives, which typically range between three to five years. The Company’s judgment is required in determining the point at which various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized. The estimated life is based on management’s judgment as to the product life cycle.

Research and Development Costs – Costs associated with the development of our products are charged to expense as incurred.  $213,345 and $1,541 were incurred in the three month periods ended March 31, 2015 and 2014, respectively.

Equity Warrants - We issued warrants to purchase shares of our common stock in connection with convertible notes. In accordance with ASC 470-20, Debt with conversions and other options, the proceeds from the notes were allocated based on the relative fair values of the notes without the warrants issued in conjunction with the notes and of the warrants themselves at the time of issuance. We record the fair value of the warrants at the time of issuance as additional paid in capital and as a debt discount to the notes.  We amortize this debt discount as interest expense over the life of the note.  Additionally, as a result of issuing the warrants with the convertible notes, a beneficial conversion option is recorded as a debt discount reflecting the incremental conversion option intrinsic value of the conversion option provided to the holders of the notes. We also amortize this debt discount as interest expense over the life of the notes.  The intrinsic value of each conversion option was calculated as the difference between the effective conversion price and the fair value of the common stock, multiplied by the number of shares into which the note is convertible.

Stock-Based Compensation – We account for share-based payments, including grants of stock options to employees, consultants and non-employees; moreover, we issue warrants to the consultants and related parties.  We are required to estimate the fair value of share-based awards and warrants on the date of grant. The value of the award is principally recognized as expense ratably over the requisite service periods. We have estimated the fair value of stock options and warrants as of the date of grant or assumption using the Black-Scholes option pricing model.

For the three month periods ended March 31, 2015 and 2014, stock based compensation expense was approximately $48,300 and $17,588, respectively, which consisted primarily of stock-based compensation expense related to stock options issued to the employees and recognized under GAAP.

Shipping and Handling Costs - Shipping and handling charges to customers are included in net revenues, and the associated costs incurred are recorded in cost of revenues.

Advertising Costs - Advertising costs are charged to operations when incurred.  We incurred $464,746 and $87,949 in advertising and promotion costs during the three month periods ended March 31, 2015 and 2014, respectively.

Net Income (Loss) Per Share - Basic earnings (loss) per share is computed based on the weighted average number of common shares outstanding. However, basic loss per share excludes anti-dilutive securities. Diluted earnings per share is computed based on the weighted average number of common shares outstanding, increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued, and reduced by the number of shares the Company could have repurchased from the proceeds from issuance of the potentially dilutive shares. Potentially dilutive shares of common stock include stock options and other stock-based awards granted under stock-based compensation plans and shares committed to be purchased under the employee stock purchase plan. As of March 31, 2015 there were 6,460,757 potentially dilutive shares.

Restatements and Reclassifications - Certain financial statement items have been reclassified to conform to the current periods’ presentation. These reclassifications had no impact on previously reported net loss. 

Recent Accounting Pronouncements

We have reviewed recent accounting pronouncements and concluded that they are either not applicable to our business or that no material effect is expected on the financial statements as a result of future adoption.

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Summary of Significant Accounting Policies (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Summary of Significant Accounting Policies (Textual)
Deferred revenue	$ 0		$ 0
Depreciation expense	3,342	4,631
Impairment charges for patents	0	0
Amortization of intangible assets	7,557	7,508
Amortization expense of other assets	19,308	27,242
Research and development	213,345	1,541
Stock-based compensation expense related to stock options issued to the employees	48,300	17,588
Advertising and promotion costs	$ 464,746	$ 87,949
Effect of dilutive securities	6,460,757
Furniture and Fixtures [Member]
Summary of Significant Accounting Policies (Textual)
Property and equipment, useful life	5 years
Computer Software, Intangible Asset [Member]
Summary of Significant Accounting Policies (Textual)
Property and equipment, useful life	3 years
Computer Software, Intangible Asset [Member] | Minimum [Member]
Summary of Significant Accounting Policies (Textual)
Property and equipment, useful life	3 years
Computer Software, Intangible Asset [Member] | Maximum [Member]
Summary of Significant Accounting Policies (Textual)
Property and equipment, useful life	5 years
Machinery and Equipment [Member] | Minimum [Member]
Summary of Significant Accounting Policies (Textual)
Property and equipment, useful life	5 years
Machinery and Equipment [Member] | Maximum [Member]
Summary of Significant Accounting Policies (Textual)
Property and equipment, useful life	7 years
Leasehold Improvements [Member] | Minimum [Member]
Summary of Significant Accounting Policies (Textual)
Property and equipment, useful life	3 years
Leasehold Improvements [Member] | Maximum [Member]
Summary of Significant Accounting Policies (Textual)
Property and equipment, useful life	7 years

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Notes Payable (Details Textual) (USD $)	0 Months Ended
	Mar. 22, 2011	Mar. 31, 2015
Notes Payable (Textual)
Unamortized discount, new notes		$ 41,000
Note payable, net (new notes)		536,000
Convertible notes, cash value		495,000
Promissory Note [Member]
Notes Payable (Textual)
Amount of renewal and extension forgivable loan	213,000
Debt instrument, payment terms	(i) the full payment of the economic incentives; or (ii) March 31, 2016.
Period of performance for debt	5 years
New debt instrument interest rate	12.34%
Unamortized discount, new notes		15,516
Note payable, net (new notes)		$ 88,484
Promissory Note [Member] | Maximum [Member]
Notes Payable (Textual)
New debt instrument interest rate		12.00%
Promissory Note [Member] | Minimum [Member]
Notes Payable (Textual)
New debt instrument interest rate		8.00%

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Notes Payable

3 Months Ended

Mar. 31, 2015

Notes Payable [Abstract]

NOTES PAYABLE

NOTE 2 – NOTES PAYABLE

We have issued warrants for the purchase of shares of our restricted common stock in connection with raising equity and debt financing and for other professional services.  The fair value of warrants issued is determined in accordance with Codification topic 470-20.

Frisco Promissory Note. On March 22, 2011 we entered into an Amended and Restated Performance Agreement with the Frisco Economic Development Corporation (“FEDC”) pursuant to an economic incentive package. In terms of the Amended and Restated Performance Agreement, the FEDC provided us with economic assistance in the form of the renewal and extension a forgivable loan of $213,000 (the “Frisco Note”) together with performance credits over 5 years, commencing on March 22, 2011 and ending on the earlier to occur of: (i) the full payment of the economic incentives; or (ii) March 31, 2016.

The Frisco Note requires varying annual principal payments through December 2015. The Frisco Note is non-interest bearing; however, interest has been imputed at 12.34% per annum. The unamortized discount at March 31, 2015 was $15,516, and the net amount of the Frisco Note as at March 31, 2015 was $88,484.

Future principal payments of the Frisco Note payable are as follows:

2015		52,000
2016		52,000
	$	104,000

During the three months ended March 31, 2015 we issued three convertible notes with a total principal value of $536,000 for $495,000 in cash. The notes contained original issuance discounts for a total of $41,000, and interest rates ranging from 8% to 12%. The maturity dates of the notes range from September 25, 2015 to February 19, 2016. The creditors have the option at any time to convert the principal and any accrued interest into common stock of the Company at an average discount rate of approximately thirty six percent off the market price of the Company’s common stock.

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Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Preferred stock, par value	$ 0.0005	$ 0.0005
Preferred stock, shares authorized	25,000,000	25,000,000
Common stock, par value	$ 0.0004	$ 0.0004
Common stock, shares authorized	100,000,000	100,000,000
Voting common stock, shares issued	29,630,026	28,438,631
Voting common stock, shares outstanding	29,630,026	28,438,631
Series A Preferred Stock [Member]
Preferred Stock, shares issued	518,750	593,750
Preferred stock, shares outstanding	518,750	593,750
Series B Preferred Stock [Member]
Preferred Stock, shares issued	975	1,145
Preferred stock, shares outstanding	975	1,145

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Stock Options and Warrants (Tables)

3 Months Ended

Mar. 31, 2015

Stock Options and Warrants [Abstract]

Summary of option activity

	Employee				Non-Employee
			Weighted				Weighted
	Number		Average		Number		Average		Combined
	Of		Exercise		Of		Exercise		Total
Outstanding at December 31, 2014		1,707,488	$	0.31		-	$	-		1,707,488
Granted		312,500	$	.96		-	$	-		312,500
Exercised		-	$	-		-	$	-		-
Forfeited/Cancelled		-	$	-		-	$	-		-
Outstanding at March 31, 2015		2,019,988	$	0.41		-	$	-		2,019,988

Summary of assumptions to estimate the fair value of options granted

	Equity Incentive Plans for Quarter Ended March 31,
	2015			2014
Expected terms (in years)		5-10			5-10
Volatility (weighted ave.)		83.79	%		40.45	%
Risk-free interest rate (weighted ave.)		0.91%-1.07	%		1.05%-1.74	%
Expected dividend rate		0	%		0	%

Summary of warrant activity

				Weighted
	Number			Average
	Of			Exercise
	Warrants			Price
Outstanding at December 31, 2014		3,569,260		$	1.37
Granted		15,000		$	1.20
Exercised		-		$	-
Forfeited/Cancelled		(270,000	)	$	2.50
Outstanding at March 31, 2015		3,314,260		$	1.28

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	May 14, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	OxySure Systems Inc
Entity Central Index Key	0001413797
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		29,843,951

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Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

Summary of the related party financings and notes payable

Related party	Julian Ross (1)
Amount	$	255,000
Stated interest rate		0	%
Maturity		n/a

(1) Our CEO, Mr. Ross provides us shareholder cash advances and other consideration from time to time to fund working capital.

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Statements of Operations (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Statement [Abstract]
Revenues, net	$ 624,514	$ 356,229
Cost of goods sold	335,856	205,590
Gross profit	288,658	150,639
Operating expenses
Research and development	213,345	1,541
Sales and marketing	464,746	87,949
Other general and administrative	622,284	345,757
Total operating expenses	1,300,375	435,247
Loss from operations	(1,011,717)	(284,608)
Other income (expenses)
Gain on extinguishment of debt		16,226
Other income (expense)	117	(331)
Change in value of derivative liabilities	2,651
Interest expense	(331,154)	(107,607)
Total other expenses	(328,386)	(91,712)
Net loss	$ (1,340,103)	$ (376,320)
Basic and diluted net income (loss) per common share	$ (0.05)	$ (0.01)
Weighted average common shares outstanding:
Basic and diluted	28,951,882	25,889,334

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Segment Information

3 Months Ended

Mar. 31, 2015

Segment Information [Abstract]

SEGMENT INFORMATION

NOTE 7 – SEGMENT INFORMATION

We are organized as, and operate in, one reportable segment: the development, distribution and sale of specialty respiratory products and related medical products, accessories, and services. Our chief operating decision-maker is our Chief Executive Officer. Our Chief Executive Officer reviews financial information presented for purposes of evaluating financial performance and allocating resources, accompanied by information about revenue by geographic regions. Our assets are primarily located in the United States of America and not allocated to any specific region and we do not measure the performance of our geographic regions based upon asset-based metrics. Therefore, geographic information is presented only for revenue. Revenue by geographic region is based on the ship to address on our customer orders.

The following presents total revenue by geographic region for the three month periods ended March 31, 2015 and 2014:

	Three months ended March 31,
	2015		2014
Product Revenue:
United States - product sales	$	624,514	$	301,603
ROW - product sales		-		37,126
ROW - license fees/service revenue		-		17,500
Totals	$	624,514	$	356,229

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Off Balance Sheet Arrangements and Contractual Obligations

3 Months Ended

Mar. 31, 2015

Off Balance Sheet Arrangements and Contractual Obligations [Abstract]

OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

NOTE 6 – OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us.

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Notes Payable (Details) (Frisco Note payable [Member], USD $)	Mar. 31, 2015
Frisco Note payable [Member]
Summary of future principal payments of Frisco note payable
2015	$ 52,000
2016	52,000
Note payable, Total	$ 104,000

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2015

Segment Information [Abstract]

Components of revenue by geographic region

	Three months ended March 31,
	2015		2014
Product Revenue:
United States - product sales	$	624,514	$	301,603
ROW - product sales		-		37,126
ROW - license fees/service revenue		-		17,500
Totals	$	624,514	$	356,229

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2015

Summary of Significant Accounting Policies [Abstract]

Schedule of inventories

	March 31,		December 31,
	2015		2014
Parts inventory	$	149,954	$	133,477
Work in process		41,114		41,114
Finished goods		181,053		102,755
Total inventories	$	372,121	$	277,346

Schedule of finite-lived intangible assets amortization expense

2015	$	30,232
2016		30,232
2017		30,232
2018		30,232
Thereafter		234,279
	$	355,206

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Going Concern

3 Months Ended

Mar. 31, 2014

Going Concern [Abstract]

GOING CONCERN

NOTE 8 – GOING CONCERN

Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Historically we have been suffering from recurring loss from operations. We have an accumulated deficit of $19,381,311 and $18,041,208 at March 31, 2015 and December 31, 2014, respectively, and stockholders’ equity of $557,042 and $1,074,787 as of March 31, 2015 and December 31, 2014, respectively. We require substantial additional funds to manufacture and commercialize our products. Our management is actively seeking additional sources of equity and/or debt financing; however, there is no assurance that any additional funding will be available.

In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying March 31, 2015 balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, and to generate cash from future operations. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be unable to continue in existence.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2015

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. The interim financial statements include all adjustments which, in the opinion of management, are necessary in order to make the financial statements not misleading.

The accompanying Condensed Financial Statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”) and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. The Company's Condensed Financial Statements reflect all adjustments that management believes are necessary for the fair presentation of their financial position, results of operations, comprehensive loss and cash flows for the periods presented. The information at December 31, 2014 in the Company's Condensed Balance Sheet included in this quarterly report was derived from the audited Balance Sheet included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 31, 2015. Where applicable, the Company's 2014 Annual Report on Form 10-K is referred to in this quarterly report as the “2014 Annual Report.” This quarterly report should be read in conjunction with the 2014 Annual Report.

Deferred Revenue and Income

Deferred Revenue and Income - We defer revenue and income when we invoice a customer or a customer makes a payment and the requirements of revenue recognition have not been met (i.e. persuasive evidence of an arrangement exists, shipment from a company warehouse has occurred, the price is fixed or determinable and collectability is reasonably assured). Deferred Revenue was $0 for each of the periods ended March 31, 2015 and December 31, 2014, respectively.

Inventory

Inventory – Our inventory consists of raw material and components for our portable oxygen systems as well as completed products and accessories.   Inventories are computed using the lower of cost or market, which approximates actual cost on a first-in first-out basis. Inventory components are parts, work-in-process and finished goods. Finished goods are reported as inventories until the point of title transfer to the customer.

Inventories as at March 31, 2015 and December 31, 2014 consisted of the following:

	March 31,		December 31,
	2015		2014
Parts inventory	$	149,954	$	133,477
Work in process		41,114		41,114
Finished goods		181,053		102,755
Total inventories	$	372,121	$	277,346

Cash and Cash Equivalents

Cash and Cash Equivalents - We invest our cash in deposits and money market funds with major financial institutions.  We place our cash investments in instruments that meet high credit quality standards, as specified in our investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue, issuer or type of instrument.

Fair Value of Financial Instruments

Fair Value of Financial Instruments - Our financial instruments consist principally of cash and cash equivalents, accounts receivable and accounts payable.  We believe that the recorded values of all of our other financial instruments approximate their fair values because of their nature and respective maturity dates or durations. The fair value of our long-term debt is determined by using estimated market prices. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:

Level 1:  Inputs are based on quoted market prices for identical assets or liabilities in active markets at the measurement date.

Level 2:  Inputs include quoted prices for similar assets or liabilities in active markets and/or quoted prices for identical or similar assets or liabilities in markets that are not active near the measurement date.

Level 3: Inputs include management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation.

The fair value of the majority of our cash equivalents was determined based on “Level 1” inputs. We do not have any marketable securities in the “Level 2” and “Level 3” category. We believe that the recorded values of all our other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

Property and Equipment

Property and Equipment – Property and equipment are recorded at cost with depreciation and amortization provided over the shorter of the remaining lease term or the estimated useful life of the improvement ranging from three to seven years. Renewals and betterments that materially extend the life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense when incurred. Furniture and fixtures are depreciated over five years. Machinery and equipments are depreciated over five to seven years. Software is depreciated over three years.  Leasehold improvements are computed using the shorter of the estimated useful lives of the assets or the lease terms.  Depreciation expense was $3,342 and $4,631 for the three month periods ended March 31, 2015 and 2014, respectively.

Other Long-Lived Assets

Other Long-Lived Assets – We have two types of intangible assets – patents and trademarks. Intangible assets are carried at cost, net of accumulated amortization. Amortization expense for patents and trademarks was $7,557 and $7,508 for the three month periods ended March 31, 2015 and 2014, respectively.

Intangible assets with definite useful lives and other long-lived assets are tested for impairment if certain impairment indicators are identified.   Management evaluates the recoverability of its identifiable intangible assets in accordance with applicable accounting guidance, which requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Impairment charges for patents were $0 for each of the three month periods ended March 31, 2015 and 2014.

5-Year amortization expense for patents and trademarks is as follows:

2015	$	30,232
2016		30,232
2017		30,232
2018		30,232
Thereafter		234,280
	$	355,207

Other assets

Other Assets– We record Other Assets net of accumulated amortization. Amortization expense for Other Assets was $19,308 and $27,242 for the three month periods ended March 31, 2015 and 2014, respectively.

Capitalization of software: The Company accounts for internal-use software and website development costs, including the development of its partner marketplaces in accordance with ASC 350-50 (Intangibles – Website cost). The Company capitalizes internal costs consisting of payroll and direct payroll-related costs of employees who devote time to the development of internal-use software, as well as any external direct costs. It amortizes these costs over their estimated useful lives, which typically range between three to five years. The Company’s judgment is required in determining the point at which various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized. The estimated life is based on management’s judgment as to the product life cycle.

Research and Development Costs

Research and Development Costs – Costs associated with the development of our products are charged to expense as incurred.  $213,345 and $1,541 were incurred in the three month periods ended March 31, 2015 and 2014, respectively.

Equity Warrants

Equity Warrants - We issued warrants to purchase shares of our common stock in connection with convertible notes. In accordance with ASC 470-20, Debt with conversions and other options, the proceeds from the notes were allocated based on the relative fair values of the notes without the warrants issued in conjunction with the notes and of the warrants themselves at the time of issuance. We record the fair value of the warrants at the time of issuance as additional paid in capital and as a debt discount to the notes.  We amortize this debt discount as interest expense over the life of the note.  Additionally, as a result of issuing the warrants with the convertible notes, a beneficial conversion option is recorded as a debt discount reflecting the incremental conversion option intrinsic value of the conversion option provided to the holders of the notes. We also amortize this debt discount as interest expense over the life of the notes.  The intrinsic value of each conversion option was calculated as the difference between the effective conversion price and the fair value of the common stock, multiplied by the number of shares into which the note is convertible.

Stock-Based Compensation

Stock-Based Compensation – We account for share-based payments, including grants of stock options to employees, consultants and non-employees; moreover, we issue warrants to the consultants and related parties.  We are required to estimate the fair value of share-based awards and warrants on the date of grant. The value of the award is principally recognized as expense ratably over the requisite service periods. We have estimated the fair value of stock options and warrants as of the date of grant or assumption using the Black-Scholes option pricing model.

For the three month periods ended March 31, 2015 and 2014, stock based compensation expense was approximately $48,300 and $17,588, respectively, which consisted primarily of stock-based compensation expense related to stock options issued to the employees and recognized under GAAP.

Shipping and Handling Costs

Shipping and Handling Costs - Shipping and handling charges to customers are included in net revenues, and the associated costs incurred are recorded in cost of revenues.

Advertising Costs

Advertising Costs - Advertising costs are charged to operations when incurred.  We incurred $464,746 and $87,949 in advertising and promotion costs during the three month periods ended March 31, 2015 and 2014, respectively.

Net Income (Loss) Per Share

Net Income (Loss) Per Share - Basic earnings (loss) per share is computed based on the weighted average number of common shares outstanding. However, basic loss per share excludes anti-dilutive securities. Diluted earnings per share is computed based on the weighted average number of common shares outstanding, increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued, and reduced by the number of shares the Company could have repurchased from the proceeds from issuance of the potentially dilutive shares. Potentially dilutive shares of common stock include stock options and other stock-based awards granted under stock-based compensation plans and shares committed to be purchased under the employee stock purchase plan. As of March 31, 2015 there were 6,460,757 potentially dilutive shares.

Restatements and Reclassifications

Restatements and Reclassifications - Certain financial statement items have been reclassified to conform to the current periods’ presentation. These reclassifications had no impact on previously reported net loss. 

Recent Accounting Pronouncements

Recent Accounting Pronouncements

We have reviewed recent accounting pronouncements and concluded that they are either not applicable to our business or that no material effect is expected on the financial statements as a result of future adoption.

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Notes Payable (Tables) (Frisco EDC [Member])

3 Months Ended

Mar. 31, 2015

Frisco EDC [Member]

Debt Instrument [Line Items]

Future principal payments of Frisco note payable

2015		52,000
2016		52,000
	$	104,000

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Summary of Significant Accounting Policies (Details 1) (USD $)	Mar. 31, 2015
Summary of Significant Accounting Policies [Abstract]
2015	$ 30,232
2016	30,232
2017	30,232
2018	30,232
Thereafter	234,280
Total	$ 355,207

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Stock Options and Warrants (Details) (Stock Options [Member], USD $)	3 Months Ended
	Mar. 31, 2015
Summary of option activity
Outstanding Options/Warrants, beginning balance	1,707,488
Granted	312,500
Granted, Weighted Average Exercise Price	$ 0.96
Exercised
Exercised, Weighted Average Exercise Price
Forfeited/Cancelled, Weighted Average Exercise Price
Outstanding Options/Warrants, ending balance	2,019,988
Employee [Member]
Summary of option activity
Outstanding Options/Warrants, beginning balance	1,707,488
Outstanding Options/Warrants, Weighted Average Exercise Price, beginning balance	$ 0.31
Granted	312,500
Granted, Weighted Average Exercise Price	$ 0.96
Exercised
Exercised, Weighted Average Exercise Price
Forfeited/Cancelled
Forfeited/Cancelled, Weighted Average Exercise Price
Outstanding Options/Warrants, ending balance	2,019,988
Outstanding Options/Warrants, Weighted Average Exercise Price, ending balance	$ 0.41
Non-Employee [Member]
Summary of option activity
Outstanding Options/Warrants, beginning balance
Outstanding Options/Warrants, Weighted Average Exercise Price, beginning balance
Granted
Granted, Weighted Average Exercise Price
Exercised
Exercised, Weighted Average Exercise Price
Forfeited/Cancelled
Forfeited/Cancelled, Weighted Average Exercise Price
Outstanding Options/Warrants, ending balance
Outstanding Options/Warrants, Weighted Average Exercise Price, ending balance

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Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (1,340,103)	$ (376,320)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization expense	10,899	12,141
Amortization of debt discount and beneficial conversion features	288,556	95,776
Expenses paid by related parties	135,000	4,374
Stock based compensation	48,300	17,588
Forbearance expense	7,046
Gain on extinguishment of debt		(16,226)
(Gain)/Loss on derivative revaluation	(2,651)
Stock issued for services	62,670
Common stock warrants issued for services	4,433
Changes in operating assets and liabilities:
Accounts receivable	(60,035)	(272,816)
Inventories	(94,775)	10,407
License fees receivable	15,000	36,692
Prepaid expenses and other current assets	(33,159)	40,173
Accounts payable and accrued liabilities	(60,656)	212,259
Other assets	14,632	(2,976)
NET CASH USED IN OPERATING ACTIVITIES	(1,004,843)	(238,928)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(3,900)	(64,000)
NET CASH USED IN INVESTING ACTIVITIES	(3,900)	(64,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments made to related parties	(34,850)	(93,500)
Cash received from convertible notes payable	495,000
Payments made on convertible notes payable		(110,000)
Payments on capital leases	(149)	(576)
Exercising of warrants
NET CASH PROVIDED BY FINANCING ACTIVITIES	460,001	(204,076)
Net change in cash and cash equivalents	(548,742)	(507,004)
Cash and cash equivalents, at beginning of period	647,093	657,673
Cash and cash equivalents, at end of period	98,351	150,669
Cash paid during the period for:
Interest	272	7,492
Income taxes
Supplemental non-cash investing and financing activities:
Conversion of convertible notes payable	298,619	25,000
Conversion of Series A preferred stock to common stock	38	25
Conversion of Series B preferred stock to common stock	127
Beneficial conversion feature	$ 408,336

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Related Party Transactions

3 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 5 – RELATED PARTY TRANSACTIONS

A summary of the related party financings and notes as at March 31, 2015 is as follows:

Related party	Julian Ross (1)
Amount	$	255,000
Stated interest rate		0	%
Maturity		n/a

(1) Our CEO, Mr. Ross provides us shareholder cash advances and other consideration from time to time to fund working capital.

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Stock Options and Warrants (Details 1)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Summary of fair value of options granted were estimated at the date of grant using the Black-Scholes model
Volatility	83.79%	40.45%
Expected dividend rate	0.00%	0.00%
Minimum [Member]
Summary of fair value of options granted were estimated at the date of grant using the Black-Scholes model
Expected terms (in years)	5 years	5 years
Risk-free interest rate	0.91%	1.05%
Maximum [Member]
Summary of fair value of options granted were estimated at the date of grant using the Black-Scholes model
Expected terms (in years)	10 years	10 years
Risk-free interest rate	1.07%	1.74%

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Summary of Significant Accounting Policies (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Summary of Inventories
Parts inventory	$ 149,954	$ 133,477
Work in process	41,114	41,114
Finished goods	181,053	102,755
Total inventories	$ 372,121	$ 277,346